MediaCo Holding Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; comparison is with FY2020. This is an annual filing, not a standalone fourth-quarter report. Amounts are in U.S. dollars; financial statement amounts are in thousands unless stated otherwise.
Business context
MediaCo operates WQHT-FM and WBLS-FM in New York City and approximately 3,500 outdoor advertising displays across seven states. Revenue is principally from radio, outdoor and digital advertising, with events, licensing and syndication also contributing. Radio operations are concentrated entirely in the New York market.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Net revenue | $55.5 million | $39.3 million | +41.3% |
| Operating income (loss) | $5.5 million | $(1.7) million | Improved by $7.2 million |
| Operating margin | 9.8% | (4.3)% | Improved |
| Consolidated net loss | $(6.1) million | $(26.8) million | Loss narrowed by $20.7 million |
| Net loss attributable to common shareholders | $(8.8) million | $(28.9) million | Loss narrowed |
| Basic and diluted loss per share | $(1.22) | $(4.07) | Improved |
| Cash from (used in) operating activities | $2.9 million | $(9.6) million | Improved by $12.6 million |
| Capital expenditures | $1.4 million | $0.4 million | Increased |
| Cash and cash equivalents at year-end | $6.1 million | $4.2 million | Increased |
| Net working capital at year-end | $7.7 million | $4.4 million | Increased |
| Total debt at year-end | $102.1 million | $97.9 million | Increased |
Revenue gains reflected the post-pandemic recovery and the return of Summer Jam, which was canceled in 2020. Radio segment revenue rose 60.4% to $41.7 million, while outdoor segment revenue increased 4.0% to $13.8 million. New York radio market gross revenue grew 41.2%; MediaCo’s reported gross revenue to Miller Kaplan rose 62.2%.
Operating income recovered to $5.5 million, equal to a 9.8% operating margin. Interest expense rose 16.9% to $11.1 million, exceeding operating income; the company remained loss-making. The 2020 tax provision included a substantial deferred-tax valuation allowance, so the year-over-year net-loss improvement is not solely an operating comparison. FY2021 cash flow from operations less capital expenditures was approximately $1.5 million.
At December 31, 2021, reported debt comprised $68.3 million under the senior secured facility, $6.2 million owed to Emmis and $27.6 million owed to SG Broadcasting. The senior facility’s stated borrowing rate was 9.5%, variable; debt is substantially variable-rate and related-party notes accrue interest in kind. Senior facility principal maturities include $2.8 million in 2022, $3.7 million in 2023 and $61.9 million in 2024. The Emmis note also matures in 2024; SG Broadcasting notes mature in 2025.
Changes, outlook and material risks
- Radio revenue recovery and Summer Jam drove much of the rebound; outdoor revenue was comparatively stable. Radio operating income increased to $12.4 million from $2.3 million, and outdoor operating income rose to $1.5 million from $0.3 million.
- Corporate expenses nearly doubled to $8.4 million, reflecting personnel hires as the Emmis management agreement ended in November 2021 and $3.7 million in noncash stock compensation. Employee retention credits reduced 2021 expenses by approximately $1.9 million.
- Management gave no specific revenue or earnings guidance. It stated that it expected to meet liquidity needs and senior-facility covenants over the next 12 months using cash, projected operating cash flows and/or additional borrowing. The filing also says the remaining $3.0 million available under the SG Broadcasting note was extended in March 2022 to June 30, 2023, and management intended to draw as needed to support covenant compliance.
- The senior facility requires at least $3.0 million in monthly minimum liquidity and a minimum fixed-charge coverage ratio of 1.00:1.00 through 2022, rising to 1.10:1.00 from January 1, 2023. The lender may reject the appraisal used in the borrowing-base calculation or obtain another appraisal; management’s compliance assessment is therefore subject to lender discretion and operating performance.
- COVID-19 effects, advertising-market weakness, audience competition and New York market concentration remain risks. Future events, including Summer Jam, depend on public-health conditions, attendance and weather. Management noted that a renewed pandemic impact or persistent supply-chain disruption could weigh on advertising and cash flows.
- FCC renewals for both New York stations were pending, with licenses expiring in June 2022. Management said it anticipated no impediments, but renewal was not assured. Outdoor displays also face federal, state and local restrictions, including potential removal requirements.
- SG Broadcasting held approximately 94.7% of voting power at year-end, and the company is a Nasdaq “controlled company.” Related-party debt, convertible securities and preferred stock further affect capital structure and common-shareholder interests. No common-stock dividend is planned.
- The company recorded no goodwill or intangible impairment in 2021 or 2020, but FCC licenses, goodwill and other intangibles are significant assets subject to valuation assumptions. The independent auditor issued an unqualified opinion on the financial statements; the auditor was not engaged to opine on internal-control effectiveness. Management concluded disclosure controls and internal control over financial reporting were effective.
- No material legal proceedings were reported. The filing identifies no material off-balance-sheet financings or liabilities.
Most important facts for investors to verify
- Senior-credit covenant headroom, lender acceptance of the FCC-license appraisal, and availability and terms of remaining SG Broadcasting support.
- The filing’s debt-service disclosures: it cites approximately $9.3 million of senior-facility payments for the next 12 months in the liquidity discussion and approximately $10.1 million due over a March 2022–March 2023 period in the risk discussion; reconcile the amounts and periods.
- Actual renewal status and any conditions for WQHT-FM and WBLS-FM licenses, which were pending and due to expire in June 2022.
- Whether the radio and outdoor recovery can be sustained without the one-time comparison benefit of Summer Jam’s return and employee retention credits, and whether radio growth translates into cash after interest and corporate costs.
- Potential dilution and priority effects from convertible related-party notes, Series A preferred stock and outstanding equity awards; assess alongside SG Broadcasting’s voting control.
- Changes in impairment assumptions and asset values, particularly the FCC-license valuation, given the company’s substantial intangible assets and ongoing market and regulatory risks.